City, state officials spar over tax errors at hearing

A City Council hearing on tax break errors turned into a public spat Wednesday, as officials from the city's Finance Department and the state assessments agency traded blame for costly mistakes that are confusing taxpayers.

A discussion about the nuances of commercial assessments gave way to a spirited back-and-forth over who bears responsibility for chronic errors in miscalculating tax credits. City finance officials even scrapped their presentation after saying that a state official caught them off guard with his criticism.

While the city had faulted the state before Wednesday — and both city and state officials have acknowledged mistakes — the sparring in the council chambers provided a stark view of interagency discord.

It started when Robert Young, director of the state Department of Assessments and Taxation, said the city had used incorrect property values when it determined that 315 historic credit recipients had paid too little tax in past years and owed more — sometimes thousands of dollars more — on their July tax bills.

"They simply weren't the right assessments," Young said of the 315 bills, which the city began revising last month, with the result that some bills have dropped back to last year's levels.

Moments later, Harry E. Black, the city's finance director, told the council members that Young's allegation, detailed in a printed statement, was untrue. "We would have to take serious exception to that statement," Black said. "It is our view that is not actual fact."

City officials then made what Black called a "last-minute change," swapping out previously distributed handouts and putting on a slide show that criticized the state agency. One slide listed nine types of errors that the city said emerged from the state assessments office, five relating to the historic credit.

Councilman Carl Stokes, who called the hearing to push for an independent audit, described the bureaucratic dust-up as "probably the most candid conversation we've had in these chambers" since he rejoined the council in 2010.

"We have a tendency to not want to air dirty laundry," he said. "But citizens are weary of not getting answers."

The tax errors have spurred calls for an immediate audit of the Finance Department — an idea that Mayor Stephanie Rawlings-Blake opposes while her administration implements changes that she says are showing strong results.

Deputy Finance Director Henry J. Raymond urged council members to wait until next summer to conduct an audit, noting that a new automated system is scheduled to go online in coming months.

Council President Bernard C. "Jack" Young has asked Comptroller Joan M. Pratt to audit certain Finance Department functions, including the tax credit programs. Stokes said his hearing was meant in part to pressure finance officials to cooperate by providing records to the auditors.

Much of the debate Wednesday concerned two tax break programs: the historic credit, which exempts the value of approved renovations for 10 years, and a 10-year discount available to businesses in the city's designated "enterprise zone."

In 2012, The Baltimore Sun found that the city had failed to collect more than $1.5 million in potential taxes because of errors on historic credits. In addition, The Sun found in September that commercial buildings were underbilled by more than $700,000 because of wrongly calculated enterprise zone credits.

More recently, city officials have grappled with fresh confusion over the historic credit program, which they began fully operating this year. A city analysis begun last year concluded that 315 credits had been too large in prior years because of state miscalculations. (It also found that 241 were smaller than they should have been.)

State officials countered that some of the mistakes identified by the city simply reflected a new calculation method adopted by City Hall.

In 2012, The Sun found that state officials had for years miscalculated historic credits on large commercial buildings and that city officials never caught the errors. Owen C. Charles, deputy director of the state agency, conceded then that his agency made mistakes administering aspects of the program.

But Charles also said at the time that the city shared responsibility for some errors because of design flaws in a database jointly developed in 2009, and city officials agreed with that view.

At Wednesday's council hearing, the two sides yielded little ground despite assertions from officials that they maintain a good working relationship.

At one point Black said, "I guess we're going to have to agree to disagree."

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